Published by Maxwell S. Kennerly, Esquire of The Beasley Firm, LLC

Ashcroft v. Iqbal: Not Nearly As Important As You Think

UPDATE III: The most thorough critique I’ve read of Iqbal is Professor Burbank’s Senate testimony, available here (PDF). As an empirical matter, Iqbal has had a significant effect, particularly on constitutional rights plaintiffs:

The statistical analysis of 1,039 cases shows that 49% of 12(b)(6) motions were granted (with or without leave to amend) in the cases selected (from May 2005 to August 2009). Further, the rate of granting such motions increased from 46% of motions decided under Conley, to 48% of motions decided under Twombly, to 56% of motions decided under Iqbal. A multinomial logistic regression indicates that under Twombly/Iqbal, the odds of a 12(b)(6) motion being granted rather than denied are 1.5 times greater than under Conley, holding all other variables constant.

Moreover, the largest category of cases in which 12(b)(6) motions are filed was constitutional civil rights. Motions to dismiss in constitutional civil rights cases were granted at a higher rate (53%) than in cases overall (49%), and the rate of granting 12(b)(6) motions in constitutional civil rights cases increased in the cases selected from Conley (50%) to Twombly (55%) to Iqbal (60%).

Personally, I think the powers that be understated the degree to which cases were dismissed before, and now overstate the degree to which Iqbal will increase their likelihood of being dismissed. The odds are indeed worse now, but they’re still generally 50/50.

UPDATE: The NYTimes has an article on the case as well, also believing it to be a death-knell for plaintiffs, noting that federal judges "have cited it more than 500 times in just the last two months." As I wrote below, citation is not the same thing as impact. The standard is not any different from what courts have been practically applying for years, except to add the word "plausible."

“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing Twombly, 550 U.S. at 557 (brackets omitted))

To reiterate: the sky is not falling on plaintiffs. They need only plead "more than a sheer possibility that a defendant has acted unlawfully," something lawyers have been doing for centuries.]

Ashcroft v. Iqbal, released in May, will make it harder to bring a lawsuit without specific factual evidence, raising the threshold for moving a case into expensive litigation and possibly saving companies millions of dollars in legal fees. The case was overshadowed by other business rulings on consumer lawsuits, environmental and employment law and other matters in a term set to end Monday, but legal experts said it may be the most important.

"It’s the case that will be cited more than any other by a factor of 100," said Tom Goldstein, partner at Akin Gump Strauss Hauer & Feld LLP and founder of the Scotusblog Web site. He called the ruling "an unexpected gift for the business community."

In the case, a Pakistani named Javaid Iqbal sued government officials over his detainment after Sept. 11, 2001. The Supreme Court ruled that Mr. Iqbal didn’t have sufficient factual evidence to proceed with his discrimination claims.

"While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations," Justice Anthony Kennedy wrote in the 5-4 opinion. He cited the 2007 decision in Bell Atlantic Corp. v. Twombly, an antitrust case that outlined what plaintiffs must assert to make it through initial court proceedings.

As a result of the Iqbal ruling, businesses may find it easier to fend off lawsuits by persuading courts to dismiss complaints early in litigation.

I disagree. Maybe a handful of cases at the fringes with no factual allegations will be dismissed (most of these cases were already dismissed even prior to Twombly), but that’s it. Iqbal‘s casual reference to pleading standards does not change the narrow focus of the actual opinion, which relates to the very specific issue of how "qualified immunity" applies to high-ranking officials in suits against the federal government for deprivations of constitutional rights.

Tom Goldstein is right that the Ashcroft v. Iqbal opinion will be cited all of the time by defendants’ motions to dismiss, and will be cited by court opinions evaluating motions to dismiss, but that doesn’t mean defendants will get much mileage out of it.

Rather than argue the details why, let me show you what will probably become my standard draft response to such motions:

Defendant’s heavy reliance on Iqbal is misplaced. Iqbal was a Bivens action brought by a Pakistani national who alleged ethnically and racially discriminatory treatment in the post-September 11, 2001, period by numerous federal officials while he was detained for charges of defrauding the United States with regard to identification documents, charges to which he plead guilty, prompting his deportation. Iqbal, 556 U.S. ___; Slip op. 1. There was no dispute that the facts alleged by Iqbal stated a Bivens claim against all individuals directly and indirectly involved in his treatment. Id.

The narrow question in Iqbal was whether Bivens liability — which indisputably does not extend to supervisors through respondeat superior (seeMonell)– attached where the complaint alleged "a supervisor’s mere knowledge of his subordinate’s discriminatory purpose." Slip op., 13. The Supreme Court reiterated that Bivens creates a unique, disfavored and limited cause of action disconnected from normal tort doctrines and reaffirmed that, "[a]bsent vicarious liability, each Government official, his or her title notwithstanding, is only liable for his or her own misconduct." Id.

Such a Bivens-specific holding bears no relationship to the business lawsuit sub judice. Importantly, though, and contra defendant’s arguments, the Supreme Court reiterated in Iqbal that "a court must accept as true all of the allegations contained in a complaint" and that a plaintiff need only "state[] a plausible claim for relief [to] survive[] a motion to dismiss." Slip op. 14-15. Plaintiff has clearly done that here; defendants’ heavy reliance on an irrelevant Bivens opinion reveals the lack of any support in existing case law for their request to throw plaintiff out of court entirely. The Supreme Court has always instructed, and continues to instruct, District Courts to assume the facts in the complaint to be true, to make reasonable inferences on behalf of plaintiff’s allegations, and to deny dismissal where plaintiff has a "plausible" claim.

Finally, again contra defendants, Iqbal was specifically remanded to the Circuit Court to consider whether the plaintiff there should be permitted to amend his complaint to cure the deficiencies. Such is consistent with this Circuit’s precedent, in which leave to amend is to be freely granted prior to dismissal unless such amendment is clearly futile or inequitable.

So there you go. Iqbal soundly rejects Bivens liability for high-ranking government officials merely potentially aware of misdeeds much further down the chain of command (and it reiterates the appealability of an order on qualified immunity), but that’s it.

Don’t know about that. Even before Iqbal, when plaintiffs could still argue that Twombly was limited to anti-trust, we’ve gotten a great deal of mileage out of the stricter pleading standards. Check out our device preemption scorecard. You’ll see quite a few cases where plaintiffs’ claims were dismissed with leave to amend because they didn’t allege any facts to establish an FDA violation and, beyond that, that the violation caused the injury being claimed.
You’re right that this sometimes happened before Twombly/Iqbal, but we sometimes got experts disqualified before Daubert. The difference is recent, directly on point Supreme Court precedent supporting the outcome. Putting aside philosophy and rationales, and just looking at what’s actually gone on in the district courts. I think that Twombly/Iqbal could well do to motions to dismiss what Daubert did to motions to exclude experts.

http://www.litigationandtrial.com Max Kennerly

Thanks for the comment; as you can tell, I’m a big fan of your blog.
That’s a fair assessment, and of course you know preemption better than I do. I also have no doubt Twombly in particular ramped up the pleading requirements for a variety of class actions and cut out a good number of cases without any specific factual allegations of a particular party’s involvement or wrongful conduct.
But that’s in mass torts and similar fields. What I don’t understand is how this is supposed to have such an impact on “business” suits — “business” suits have always had a de facto “plausibility” requirement given the fairly strict and fact-specific elements of claims like fraud, misrepresentation, breach of fiduciary duty, RICO, etc.
Iqbal just doesn’t seem likely to heighten that, particularly given the weird parallel universe of Bivens where neither respondeat superior nor direct claims against the entity defendant (i.e., the US) exist, where plaintiffs not only have to prove the wrongful conduct but have to prove it was “clearly established” to surpass qualified immunity and recover damages. I’d say Bivens claims are a far more unique circumstance than even Antitrust, not least because they’re entirely federal common law, even though, as you know, federal common law is not technically supposed to exist.
To the extent there has been a change, it was Twombly getting rid of the “no facts” language and moving the “plausibility” analysis from de facto to de jure. I can see that having an impact in your field where a lot of suits start almost as fishing expeditions. But I just don’t get this “business” interpretation unless you narrowly construe the interests of “business” as being class action defense.

Adam

Yea you’re wrong

http://www.dsl.psu.edu/faculty/visiting/campbell.cfm Ray Campbell

If you think Iqbal was “Bivens specific,” you need to spend some more time nose first in the opinion. Yes, it arose in the context of a Bivens claim, but the court went out of its way to make clear that the standard it set forth applied to all Rule 8(a) pleadings, no matter what the cause of action was. It so easily could have gone off on Bivens or qualified immunity, and that it did not matters.
Fraud will continue to be measured under Rule 9(b), and so Iqbal won’t matter there. It also won’t apply to pleadings put forward in state court or before arbitration boards. That it doesn’t apply where it doesn’t apply doesn’t mean it’s not important where it does apply.
Precedent in this area has been inconsistent and result oriented, so it wouldn’t amaze me if in a year or two the Court says that Iqbal doesn’t say what it says. If it holds to it, though, many cases that have proceeded on general, conclusory allegations (such as the multicar accident reflected in Form 12) are going to be sent packing before discovery commences.

http://www.litigationandtrial.com Max Kennerly

Ray,
Thanks for the comment. I largely agree, and I also believe many members of the majority intended a greater impact. The problem for them is the vehicle by which they chose their ruling: Bivens is unquestionably one of the weirdest claims on the books, a federal common law tort that doesn’t obey basic principles of tort liability, like respondeat superior.
As such, whatever those members intended, the fact remains that their holding is trapped in the context of a fundamentally weak claim, i.e. a conclusory Bivens allegation against a top-level official. I think at least one member of the majority recognized that, which is why such an allegedly sweeping overhaul of pleading was only six paragraphs long and referenced only Twombly, instead of the massive body of pleading law.
Odds are good they’ve created a circuit split for themselves, requiring revisiting soon.

RL

In our district, at least, judges are interpreting Iqbal as requiring heightened pleading in any cause of action involving intent. I think the biggest impact will likely be in employment discrimination suits. My prediction is that at least half the cases that would get kicked at summary judgment will now get kicked at the pleading stage. That’s a lot of defense dollars that big business will be saving.

Wilma E. Reveron

I am going through a section 1983 jury trial in which the District Court is using Iqbal, with no motion to dismiss presented, to limit plaintiffs’ presentation of evidence alleging inssuficinecy of pleadings even though the Complaint is a 2008 pre Iqbal.
I do not believe Iqbal should be used outside of the motion to dismiss stage (where plaintiffs’ still have an opportunity to amend the pleadings) and should not be applied retroactively to pleadings filed under the no set of facts standard.

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